Suncorp has tweaked its 2025-26 gross written premium outlook after half-year earnings dropped sharply, driven by “elevated” natural catastrophe costs.

GWP growth is now expected to be about the “bottom of the mid single digit range given the current cycle in commercial in Australia and New Zealand”.

Group CEO Steve Johnston says the revised range means “4% to 6%, and bottom is 4%”.

The insurer previously flagged growth in the mid single digit range.

“GWP growth for commercial continues to be impacted by the softer market conditions as well as the impact of a weaker New Zealand economy,” CFO Jeremy Robson said.

“But we are seeing some signs of a bottoming of the commercial pricing market, as well as an improved outlook for the New Zealand economy.”

Hail losses dominated Suncorp’s natural catastrophe bill in the December half, accounting for 26,400 claims at a cost of $708 million.

The insurer had nine declared natural hazard events in the period, which triggered more than 71,000 claims at a net cost of about $1.3 billion.

“It’s evident … the half was significantly impacted by elevated natural hazard events,” Mr Robson said. 

“The experience of $1.319 billion was $453 million above allowance … we remain confident that our natural hazard allowance … is appropriate.

“As previously flagged, we continue to review our [reinsurance] program against our reinsurance framework and our key objectives are optimising capital efficiency relative to our cost of equity.”

He says the FY26 reinsurance program “best met [our] objectives when placed in July last year. But a softening market may provide the opportunity to reassess additional cover …we’ll continue to review our options on reinsurance leading up to the July renewal.”

Investment bank Jefferies’ equity analysts say the revised GWP outlook is a “reasonable target”.

They expect the Australian hail events to have an impact on global reinsurance rates.

“The severity of the November hailstorms challenges the assumption that such events are random outliers,” Jefferies say in a research note. “In our view, reinsurers will be pricing for hail globally, and Australia’s history of secondary perils will be taken into account.”